Dynacor Group Inc.

 

Dynacor is a small gold processer for small artisanal (family and small company) miners in Peru. The thesis is not necessary predicated on gold prices because of their volume growth but it is a completely different investor mindset (diversification) of benefiting from inflation and volume growth. Although gold prices are up 16% from the highs of 2020 (as of April 2024) or just under 4% per annum, they are up 76% from 10 years ago or just under 6% per annum and only 1.9% per annum from the last gold froth run in 2011.

 

 

Reports in $US

Ests                         3Q24    4Q24    FY24     FY25

Revs                        61.6       61.5       258        283

EBITDA                 5.8          5.8          28            32

 

P=5.44, f/x=1.3711, div=C$0.14, yield=2.6%, TTM EPS=0.51, P/E=7.6X, Net cash/share $1.13, additional 0.53/sh in excess NWC

 

Mid Quarter Update – March 3, 2025

  • FY25 Outlook:

  • Prodn: 120-130k Au Eq oz (vs TTM 124k, growth topped up for now), Revs 345-375m (+27% at midpoint), NI 14-17m, OpEx +3m

  • NI forecast is down vs TTM at 19m, coupled with dilution from equity offering, implies EPS 0.35, down from TTM 0.52, would put the forward P/E=11X from 7X trailing.

  • Capex 10-15m (5-8m in Peru, 5-7m in Senegal)

  • Gold 2800-3000, currently ~2900

  • I view this outlook as disappointing from a net income perspective given projected growth in revenue (all due to higher gold prices) as the company is topped out at capacity for now which probably explains the accelerated growth plans although it would be preferable to see a modest increase in net income to demonstrate discipline and consistency, The company still has an outstanding balance sheet and is still discounted, just not as much given the projected decline in earnings. Once their new capacity comes on stream the company should have significant growth opportunities but it’s not clear when those will start delivering operating leverage.

Mid-Quarter update – Feb 11, 2025

  • Updates growth plans

  • Goal to produce 500,000 AuEq oz and US $1bn sales by 2030

  • To open 4 new processing plants, 3 in West Africa and 1 in Latin America

  • West Africa includes Senegal, Cote d’Ivoire, and Ghana. Latin America undisclosed

  • Mgmt estimates construction costs of a 300tpd mill would cost $23-25m and working capital $7-8m

  • 2025 Objectives:

  • Senegal -  $4m pilot plant by 1Q26

  • Cote d’Ivoire/Ghana – start prep work for environmental assessment in at least 1 country

  • Latin America – evaluate expansion in Peru or Ecuador

Mid-quarter update – Jan 20, 2025

  • Raised $31.6m at 5.50 (16% dilution) up from initial 20m announced, to fund expansion projects/activities (construction, environmental assessments, etc).

Mid-quarter update- Dec 19, 2024

  • raised dividend 14% to 0.16, 2.8% yield,

3Q24 .16 vs .06

  • Nov 14, 2024, P=5.44, TTM EPS=0.51, P/E=7.6X

  • Revs +20.2% to 76.2m, GM 13.6% vs 11%, OM 10.5% vs 8.1%, OpInc +55%, EBITDA 8.9m vs 5.8m, est 5.8m

  • Volume processed +7.2% to 47,721 tonnes, gold prodn -12% to 30,002 AuEQ due to lower grade ore, Gold prices +28% to 2477, OCF before NWC 6.6m vs 3.9m, after NWC 10.3m vs 5.2m

  • Repurchased 244,700 shares for C$1.3m

  • FY24 Outlook “should highly exceed its net income forecast” Net Income 12-15m, EPS .33-.41 assuming gold priced $2000-2050 given TTM Net Income 19.1m

2Q24 .14 vs .12 using 30% tax rate instead of 42% reported due to fx (.02 drag)

  • Aug 15, 2024, , f/x=1.3711, P=5.07, TTM EPS=.43, P/E=9X

  • Revs +4.5% to 67.4m, GM 14.8% vs 11.9%, OM 11.2% vs 8.7%, OpInc +33.7%, EBITDA 8.3m vs 6.6m (est 6.4m)

  • Volume processed +5.4% to 42,935 tonnes, gold prodn -13.2% to 28,364 AuEq due to lower grade ore. Gold price +18% to 2338, OCF before NWC 5.8m vs 5.2m, after NWC 9.7m vs 1.4m

  • Repurchased 32,700 shares for $0.1m

1Q24  .13 vs .11

  • May 16, 2026, P=C$5.42, f/x=1.3615, TTM EPS=0.40, P/E=10X

  • Revs +19.4% to 67.7m, GM 13.5% vs 13.8%, OM 10.7% vs 10.7%, OpInc +19.5%

  • Volume processed +5.9% to 44,006 tonnes, gold production +9.4% to 31,769 AuEq oz, gold price

  • Repurchased 926.8k shares for $C3.7m, OCF before NWC 5.6m vs 5m, after NWC 9.6m vs 9.7m

  • 4Q23   .10 vs .09,  FY23 EPS +25.8% to 0.39

  • March 27, 2024, P=4.11, f/x 1.3572, TTM EPS=0.37, P/E=8X, 7X top end of FY24 Guide

  • 4Q Revs +38% to 65.5m, GM 11.8% vs 12.8%, OM 8% vs 9.3%, OpInc +19%, NI +1.9% due to 35% tax rate vs 24%

  • FY23 Revs +26.7% to 250.2m, GM 12.1% vs 12.4%, OM 8.8% vs 9.2%, OpIOnc +21.8%

  • OCF before NWC 18.6m vs 14.9m, after NWC 9.6m vs 6.2m, NI 15.1m vs 12.0m

  • FY23 production record 130,001 ounces +17.8%,

  • First full year with capacity at 500 tonnes/day, operated at 468 tonnes/day, ore processed 170,668 tonnes +13.2%, gold produced 130k AuEq oz +17.8%

 

March 21, 2024

Forecasts FY24 Revs +6-14% to 265-285m, Net Income 12-15m, EPS .33-.41 assuming gold priced $2000-2050